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The basics: what is spot, bid & ask, spread and premium?

Published by Tavex Kft. 6 years ago
Gold price (XAU-HUF)
856 677 HUF/oz
  
- 9 266 HUF
Silver price (XAG-HUF)
10 863 HUF/oz
  
- 68 HUF

Before you start investing in precious metals, make sure you know the basics: what is spot, bid & ask, spread and premium?

The terms:

The spot is the current market-clearing price of gold or silver that is set by factors of supply and demand in the global financial markets. The spot price refers to 1 troy ounce of .999 fine gold or silver.

The bid (or buy as a layman’s term) is the price at which market participants, such as Tavex, are ready to buy gold or silver at any given time.

The ask (or sell as a layman’s term) is the price at which market participants, such as Tavex, are ready to sell gold or silver at any given time.

The basics
1 oz Austrian Philharmonic gold coin

The spread is the difference between the ask and the bid price. For example, if the bid for a 1 ounce Austrian Philharmonic gold coin is €1500 and the ask price is €1540 then the “bid-ask spread” is €40. A low bid-ask spread is often a good indicator of high liquidity. Products with high liquidity, such as the Gold Philharmonic coin, will have a lower bid-ask spread compared to other less well-known gold coins. This means that you, as an investor, will save money when trading in and out of your investment.

Every product that Tavex sells comes with a premium. A premium is added to cover the cost of the fabrication and distribution of the item. The premium is calculated by taking the price of a product minus the spot price of the metal. For example, if the current spot price of gold is €1520, and if Tavex sells a 1 ounce Gold Philharmonic for €1570 then the premium is €50.

We hope the main terms are clearer now for you  – the basics: what is spot, bid & ask, spread and premium.

Gold price (XAU-HUF)
856 677 HUF/oz
  
- 9 266 HUF
Silver price (XAG-HUF)
10 863 HUF/oz
  
- 68 HUF

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